Find the Best Small Business Loans for You

Browse Our Small Business Loan Products

An SBA loan is government-guaranteed, long-term funding made by SBA lenders that allow businesses who may have been turned down by the bank to receive low-interest rate funding that can be used for many business purposes.

Maximum Loan Amount

Term

Interest Rates

Speed

With a business line of credit, a financial institution gives you a credit limit, or a maximum amount of capital you are able to draw on at any given time. Just like a credit card, you only pay interest on the amount you use.

Maximum Loan Amount

Term

Interest Rates

Speed

Merchant cash advances are not your typical small business loan. With an MCA, financing companies upfront you a set amount of cash and then you repay this advance (plus their fee) with a set percent of your daily credit card sales.

Maximum Advance Amount

Term

Factor Fee

Time to Funding

Our three startup loan products can help your young business get the capital needed to grow. These three products (business credit cards, business line of credit, and equipment financing) are a more traditional form of startup capital and a great option if you have a strong personal credit score.

Maximum Loan Amount

Term

Interest Rates

Speed

A lot of people donât know that you can actually use a personal loan for business purposes. Personal loans are especially helpful for new businesses that donât have a long financial history to show lenders. Personal loans can often have lower interest rates than some business loans, making it a great option for young companies looking for financing to grow their business.

Define What You Can Afford

One of the first questions lenders will ask you when you start your small business loan search is âHow much are you looking for?â Yes, we would all love a cool $5 million. But instead of thinking of this question as how much you want or need, think along the lines of what you can actually afford. If you donât know the answer to that question, follow the steps below.

Step 1

Calculate Your Debt Service Coverage Ratio

The best way to determine the small business loan payments your business can afford is to calculate your debt service coverage ratio. This is the number lenders will use to see how much cash you have to service your debt. This is also a number YOU can use to make sure you are comfortable with any potential debt payment. Your debt service coverage ratio is simply:

Cash Flow / Loan Payment = DSCR

You can calculate this on a monthly or annual basis. Hereâs how it works.

On average, how much cash flow (sales - expenditures) do you have coming into your business each month? Letâs say itâs $3,000. And how much do you project your monthly loan payment will be (both principal and interest)? Letâs say $1,000. This means you would have a debt service coverage ratio of 3, which is healthy!

All lenders are going to want to see that you have a DSCR of at least 1, because if you donât, where are you getting the cash to pay them back? However, most lenders will require that you have a DSCR of at least 1.5 or greater. But, donât forget, you should use this ratio for yourself too! What number are you comfortable with? Decide now. Letâs say itâs 2. Now, take your current monthly cash flow, divide it by 2, and use that number as you shop. Aim to find a loan that will allow your total monthly loan payment to be equivalent to that amount. Want to calculate what your DSCR would be with various small business loan amounts and interest? Download our DSCR calculator to the right!

Perform a Small Business Loan Performance Analysis

It is important to remember that the reason you are taking out a small business loan is to invest in your business. Before taking on the debt, you need to make sure that you will in fact have a return on this investment. Can you safely say that this debt will grow your business? Itâs not an easy question to answer, so a great thing to do before committing to a loan is forecasting loan performance. By running a loan performance analysis, you can see how this small business loan will financially impact your business. It is also a great way to ensure you arenât taking out too large (or too small!) of a loan.

Step 3

Write Down Your Ideal Loan Payment

Now that youâve taken a look at how small business loans can financially impact your business, and how to calculate your debt coverage ratio, decide on a rough estimate of a total monthly loan payment youâd be comfortable with. Keep this number close as you start your search.

The Role Credit Plays in Small Business Loans

Believe it or not, your personal credit score is one of the most important parts of the small business loan application. The way lenders see it is that they are lending money to the small business OWNER, so they want to ensure that youâve got a strong history of acting wisely when someone has given you âcredit.â The better your credit score, the better your chances of your securing an affordable small business loan.

A great thing to do before you apply for a small business loan is to pull your own credit report and check your credit score. You can do so for free at annualcreditreport.com. Be wary of any other site that makes you pay! By pulling your credit report, you now know exactly what lenders will be looking at.

Analyzing Your Credit

The first thing you need to do is check your report for errors. There could be things on your report that arenât correct or even applicable to you that are bringing down your score. This could be things like:

Erroneous accounts or credit lines you never opened

Erroneous judgments or collections

Accounts, judgments or collections that were satisfied but are still showing as outstanding

Judgments or collections you never knew about

To get this information removed, you need to first verify that the information is in fact erroneous. If itâs a collections matter, you could start by tracking down the collection agency and asking them to let the credit bureaus know youâve satisfied the debt. Or, if it is an unknown outstanding debt, pay it off and then ask the agency to contact the bureaus. For other matters, contact the credit bureaus directly. Send a dispute letter along with the supporting documents needed to verify the claim. The credit bureaus are obligated to investigate these matters and will usually get back to you with a result in around 30 days.

If you donât find errors on your report, but you think you can stand to improve your credit history, try to identify the areas where it needs the most work.

As you can see, your payment history has the biggest impact on your FICO score. The best place to start improving your score is to make sure youâre paying all your bills on time!

If youâre curious what credit score you need to apply for a loan, thatâs a tough one to answer. For online lenders, youâre going to want to have credit score over 550, but you will receive better offers if your credit score is higher, say over 620 or preferably 640. If you think you can improve your score, it may be worth it to take the steps to do so and wait a few months before applying.

Applying for and Closing Your Small Business Loan

The small business loan world is a lot more complex than it used to be. Itâs no longer just bank loans and lines of credit. There is an entire new universe of online lenders offering a plethora of products. Itâs important you are familiar with these options before you get started.

Step 1

What Financials Will Lenders Ask for During the Small Business Loan Application?

Small business loans can have pretty extensive applications â depending on the loan product you are applying for. Generally speaking, the lower the cost of the loan and the longer the term of the loan, the more paperwork that will be involved. But, no one lender is alike and each will have their own set of requirements. Hereâs an idea of some of the most popular documents needed for small business loan applications. Keep in mind â this is only a portion of what many lenders will ask for!

Business Bank Statements

Bank statements are a document you will almost always be expected to provide. For some lenders, you may just need 3 months. Others may ask for 6 or 12 months. Some will even ask for 2 years. Be prepared to pull whatever history length the lender asks for.

Balance Sheet

Many lenders will want to see your balance sheets or âstatements of financial position.â They will most likely want to see a balance sheet that has been updated within 60 days. This is to give the lender a âsnapshotâ of the companyâs recent financial health.

Profit and Loss Statement(s)

Many lenders will want to see your Profit and Loss Statements, also known as your Income Statements. They will most likely want to see your P&Ls from the last two fiscal years (also shown on business tax returns), as well as a company prepared Year-to-Date (YTD) version that has been updated within 60 days. This is primarily to determine the cash flow of the business and if it is able to meet existing and proposed debt obligations.

Business Debt Schedule

Some lenders are going to want to know if you currently have business debt and if you do, the payment details of that debt. To do this, they will ask for a debt schedule. This helps the lender determine your current debt obligations and if your cash flow is able to meet existing and proposed debt obligations.

Personal Tax Return

Most lenders will want to see your most recent personal tax return to verify your income. If you havenât filed your taxes for this year, it might be best to do so before you apply, or at least have your extension paperwork readily available.

Business Tax Return

Most lenders will want to see your business tax returns from the last two fiscal years. If you havenât filed your taxes for this year, it might be best to do so before you apply. Lenders will use your business tax return to verify revenue, among other things. If you are a sole prop or LLC who doesnât file a separate business tax return then donât fret! Lenders will just want to see the forms and paperwork tied to your business, like a Schedule C, on your personal tax returns.

Calculating the True Cost of Small Business Loans

When you are shopping small business loans, it can be very difficult to compare the various products on an apples-to-apples basis. Why? Many lenders advertise the cost in âinterest ratesâ but, truth be told, this doesnât offer a full representation of the price of the product. So, how can you compare products?

Ask lenders for the APR

APR stands for Annual Percentage Rate. It is probably a term you are familiar with if you use a credit card. It represents the cost of a loan by including the interest rate AND any other fees you will incur to take on the loan. You may think youâre getting a killer interest rate from a lender, but if they have a ton of hidden fees, they may not be the most affordable option. Thatâs why APR is so important â it lets you compare loans across the board. APR can sometimes be difficult to calculate, so it is best to use an APR calculator.

Step 3

Know What Fees to Watch For

Now that you know fees affect APR, youâre probably wondering what type of small business loan fees weâre talking about. Hereâs a cheat sheet of fees you need to watch for with small business loans:

Origination Fee

An origination fee directly reflects the cost lenders incur to make a loan (think administrative work, etc.) It is often quoted as a percent of the principal.

Application Fee

Since it costs money to run credit and background checks, as well invest the time to underwrite a loan, some lenders will charge you a processing/application fee to recoup that cost upfront, or wait until the loan is closed.

Guarantee Fee

If youâre considering an SBA loan, there is a chance you might have to pay a guarantee fee. Why? The SBA doesnât directly make small business loans. Instead, they guarantee portions of loans, making it less risky for lenders to make loans to small business. But, to do this, lenders must pay a portion of the guaranteed amount to the government, so they often pass this fee directly on to the borrower.

Late Payment Fee

Probably not much of a surprise here, but with some lenders, if youâre late on a payment, theyâll charge you a fee. If they arenât automatically drafting from your account, be sure youâve got a good internal reminder system in place so you never forget a payment!

Pre-Payment Fee

Considering paying your loan off early? Better be sure the lender doesnât have a pre-payment penalty! This fee is usually calculated as a percent of the outstanding principal at the time you decide to pay it off. Many lenders do this to ensure they recoup their costs from underwriting/servicing the loan.

Check Processing Fee

Many borrowers make their payments through ACH. If you prefer to send your payment in with a check, some lenders may charge you to process it. It is very important to discuss payment methods with lenders before signing on the dotted line.

Step 4

Choose Your Small Business Loan

Youâve done a lot of hard work to get this far! Now it is time to make the call. Ask yourself:

Can I repay this loan?

Am I comfortable with the payment, whether it is daily, weekly, or monthly?